Natural Gas Technical Analysis and Near-Term Outlook
This is a brief analysis for the next day or so. Our weekly Natural Gas Commentary and daily updates are much more detailed and thorough energy price forecasts that cover key natural gas futures contracts, calendar spreads, the UNG ETF, and several electricity contracts. If you are interested in learning more, please sign up for a complimentary four-week trial.
December natural gas rallied today and settled well above a key $3.07 target, overcame the last major swing high at $3.101, and challenged another confluence point at $3.21 that held on a closing basis. Daily trend indicators are bullish and the wave formation up from $2.514 calls for a continued rise. The daily Stochastic is overbought but can remain in that state for a long period. Otherwise, there are no daily bearish patterns or signals that call for a reversal.
Overcoming $3.24 will call for a test of the $3.31 larger than (1.618) target of the waves up from $2.643, $2.688, and $2.832. This objective is also in line with the 200-day moving average. This is a point from which a test of support might take place given the confluence of $3.31. Even so, any move down will likely be a correction. This is because the primary wave up from $2.514 settled above its larger than (1.618) target today and now favors an eventual test of the $3.48 XC (2.764) projection. Along the way to $3.48, look for a target at $3.41 that is in line with the 62 percent retracement of the decline from $3.959.
Should a correction take place before overcoming $3.24 look for initial support at $3.13. This is the equal to (1.00) target of the small wave down from $3.229. Falling below this would call for a test of this wave’s larger than target, today’s midpoint, and the 21 percent retracement of the rise from $2.514 at $3.08. Settling below $3.08 is doubtful but would call for a test of key near-term support at $2.96. This is in line with the 38 percent retracement and today’s open.
